Broker snap: Lots of pluses at Telecom Plus

25th May 2010 11:52

Multi-utility supplier Telecom Plus's full year profits were down but the figures were not as bad as expected according to KBC Peel Hunt, which has raised its target price for the stock."Reported profits were impacted by the normalisation of energy margins, which masked the strong underlying growth," KBC analyst Charles Hall suggests. "The 19% increase in customer numbers and 24% increase in services ensures good visibility for this year's numbers," Hall adds.The broker applauds the increased focus on home owners, even though it has slowed the rate of new customer additions. "Homeowners take more services (3.27 vs 2.86), have a lower churn (1.5% per month vs 2.7%) and have lower bad debts," KBC notes.The broker has reiterated its "buy" recommendation on the stock and upped its target price to 380p to 360p.FinnCap is also a buyer of the stock, noting that the "reason to hold the stock remains the dividend, and the predictability of the financials is highly encouraging." It too has lifted its price target to 380p.